Too Big to Fail or So Big They Must Fail

Rothkopf discusses not only the rise of big stateless corporations, now dictating foreign policy, but also what domestic capitalism has turned itself into.

Using Newt Gingrich's attack on Mitt Romney as an example: “If we identify capitalism with rich guys looting companies, we’re going to have a very hard time protecting it.” For once I have to agree with Newt, though he's hardly an example of principled commercialism.

Rothkopf rightfully claims that a "key part of fixing capitalism will be reconciling the large and growing imbalances between the public and private sector." Corporations have gotten so big and powerful that when they make bad decisions, citizens are told that they must pay for those bad decisions or go down with the ship. Yet when they rebound, they cling to their wealth and throw the rest of us out of the lifeboats.

When early corporations were established by royal charters almost a millennium ago, there was no mistaking their purpose. They had been created by the state to serve its interests. But over the centuries, they took advantage of their special status, which allowed them to achieve enormous scale and buy political favor. The result: They helped shape the development of laws that further tipped the balance of power in their favor ... Corporations have morphed from legal entities designed to ensure an enterprise could survive the death of its owners to institutions possessing more rights than people.

Even Adam Smith, the father of capitalism, condemned "the abuses of the megacompanies of his day, like the British East India Co., calling them “nuisances in every respect,” since the monopolies they fostered inevitably led to profit-destroying corruption."

Conservatives like to suggest that their radical movement is in response to the French Revolution, heralding Edmond Burke as the father of modern conservatism. However, instead of living in the 18th century, they might want to learn from it.

The major cause of the French Revolution was the stark division of social classes in French society. The First Estate, the Church and clergy, which represented less than 2% of the population, owned almost 10 per cent of all land in France. They paid no taxes and relied on tithes to support their endeavours.

The Second Estate, or nobility, made up just 2 percent of the population, but owned most of the wealth. Like the Church they paid little in taxes, despite earning enormous sums from rent on their property, and interest on loans.

The Third Estate was everyone else. 96% of the population, with the poor propping up them all, through hefty taxes, tithes to the church, and rents to their landlords. However, it was not the poor who initiated the French Revolution, but the middle class. The merchants, manufacturers and professional people, who resented the birthrights of the nobility.

Today's capitalism has become a culture of nobility, where lobbyists hold court, the right-wing media act as royal scribes and the true aristocracies are the "Walmarts and Exxons of the world". We have recreated the conditions that led to the French Revolution.

But What of 'Laissez Faire'?

The notion that if you leave business alone and let the markets prevail, everyone will win, has proven to be the biggest hoax of all time. Says Rothkopf:

The current argument that larger government impinges on rather than protects or advances individual liberties is a far cry from the ideas that fueled England’s Glorious Revolution and the American Revolution. It ignores the fact that the void created by smaller government is often not filled by “liberty.” When matters like the global environment or regulation of derivatives trading are left entirely to market forces, for instance, outcomes tend to serve the most powerful because markets neither have a conscience nor do they ensure opportunity.

And yet the U.S. Supreme Court is allowing large corporations to be classed as "citizens", which means that they can now buy politicians outright. No more under the table transactions. Put your money in their mouth and a bill of sale comes out their butt.

The 96% in France created democracy. The 1% in the United States and Canada is intent on destroying it. What side of history do we want to be on?

1 comment:

Excellent post, Emily. I think Capitalism in its current guise is, perhaps, its ultimate outcome when left unregulated and unchecked. In its unending and increasingly rapacious quest for profit in inevitably becomes cannibalistic and self-destructive and ends up destroying almost everything around and connected to it. The pet deregulation theories of economists like Alan Greenspan take nothing of the real world impact on human lives into account; to them it's all a game or intellectual exercise and it's the rest of us who pay for it.